At the end of the accounting period,the balances in the temporary accounts are closed while the balances in the permanent accounts are carried forward to the next accounting period.

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This is the basic principle of closing entries in accounting. Temporary accounts such as revenues, expenses, and dividends are closed to zero, while permanent accounts such as assets, liabilities, and equity carry forward their balances to the next period.

At the End of the Accounting Period,the Balances in the Temporary